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Tuesday, July 19, 2005

Wisdom Of Crowds Is An Oxymoron

A few technology entrepreneurs are talking about a new business experiment in which a business plan is open-sourced. Let me explain that a little bit before I give you my 2 cents on the subject.

Yes, you heard correctly. Business bloggers and readers will test their cumulative business knowledge by collectively starting and running a business - out in the open.


Robert May is in charge of this experiment and I give him props for doing something fairly interesting. However, he and the experiment are destined to fail in the traditional sense of business. i.e. They won't make more money than they make.

Dude, Jason, Don't be so harsh!
Business isn't for the faint of heart. If you're not willing to go all in and take risks then you'll never be able to succeed. However, risk-taking is only part of the equation, there are a million other factors at play. In order to navigate those entrepreurial waters you must have a clear direction of where the company is going.

This business plan has none.

You must be able to make split-second decisions and this experiment doesn't allow for that since everything is based on a vote and what the community wants. Remember what happened to Rome when the government let the people do what they wanted rather than what they needed? It Fell!

There must be clear leadership in business. This experiment allows for Robert May to present ideas for the community to vote on. However, he's open [from what I can infer] to taking ideas and determining whether or not they will be included in the proposed ideas for the business.

But even though he as the control of determining which ideas are up for vote, he's at the mercy of the crowd and has no final say [unless I've misunderstood something]. That's not the way business works. If the leader isn't able to have the final say, under normal circumstances, then the business will fail. It will fail from a lack of wisdom on the part of the crowd.

Crowds are dumb by nature
Think about it, that's how the Pied Piper got all those mice to drown themselves. Or how about the most recent WoodStock. The crowd went nuts and endangered themselves because of the mob mentality.

Company culture is often a reflection of the company's leadership. The employees that stick around are able to shape some of the culture but those employees were naturally selected based on criteria the CEO of the company laid down and they echo that culture. A company without culture has no soul.

Have you ever heard a church choir singing a hymn? Each person in the choir blends into the louder voice of the choir as a whole and it's hard to distinguish one voice from another. Compare that to an opera singer. You can hear every note an opera singer hits and you know exactly where he/she is because she's not beind drowned out by a choir [aka the crowd]. The opera singer is ultimately responsible for his/her performance and the crowd [aka the customer] will praise the singer for a good performance and boo the singer for a bad performance. However, if you're in the crowd and the choir sounds lousy, it's hard to point the finger. You don't really know who's singing on key and who's not.

Personally, I don't think this business experiment has a chance of succeeding because of the lack of ownership a crowd presents. The inability to issue responsibility to a specific person in the business [crowd] will bring it down.

On the other hand, this experiment won't fail for a lack of free publicity from a well executed viral marketing plan by Robert May. Hats off to him for coming up with a creative way to build up his own brand and get a lot of bloggers excited. You never know, I could be wrong... just kidding, I'm not.

By Jason Dowdell at 04:58 PM | Comments (0)

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